Neglect of small to mid-box sector cramping regional growth, report warns

The undersupply of small to mid-sized warehousing is costing the English economy £480m a year and preventing the creation of 8,600 direct and 7,300 indirect jobs per annum.

According to a report by industrial and logistics (I&L) property company Potter Space and property investment experts Savills, shortages in the small to mid-box sector, which represents 95% of all I&L property in England, is preventing thousands of businesses from fulfilling their expansion plans.

The report calls on local planners and central policy makers to take urgent action to rebalance land allocation in favour of the small to mid-box sector.

It argues that this sector, which includes warehousing up to 100,000 sq ft in size, offers more opportunity for growth and jobs creation than the big-box segment of the I&L market, where one million sq ft-plus warehouses dominate the landscape.

Launching the report this week, Potter Space and Savills said: “In addition to representing 95% of all I&L property, the small to mid-box sector represents more than half - 56% - of all I&L floorspace and is home to a cross-section of businesses, from large multinationals to smaller players.

“Demand for this type of (I&L) property remains strong, despite increased economic uncertainty. Rental growth across the sub-100k sq ft market has averaged 64% since 2011, demonstrating the segment’s resilience, mainly due to the diverse nature of its customer base.”

Jason Rockett, Potter Space MD, said: “The fact that there is so much un-met demand in the small to mid-box space is a sign that more needs to be done to support this segment of the I&L market.

“These properties are home to many SME businesses, which form the backbone of the English economy. Local planners and policymakers centrally must now act to rebalance land allocation in favour of the small to mid-box sector.”

Read more

• Warehousing glut looms, senior industry figure warns

Potter Space and Savills hope the report will prompt planners and decision makers at a local and national level to re-prioritise land allocation in favour of the small and mid-size I&L property market.

Rockett, added: “The ability of local planning authorities to accurately predict demand for I&L development land is crucial to ensure that the country can meet ever-changing consumer and commercial requirements.

“E-commerce is important, having grown significantly over the last few years, but manufacturing, transportation, pharmaceuticals and SMEs spanning many other industry sectors continue to drive demand for this type of space too.”

The report has identified a number of regional hotspots that are ripe for growth by analysing socio-economic indicators, local infrastructure and leasing data over the last five years.

These hotspots include Leicestershire, Nottinghamshire/Derbyshire and Bedfordshire/St. Albans, as well as Birmingham, Leeds, Liverpool and Manchester. The report argues that these areas have strong demand, which is currently not being met.

Mark Powney, Savills planning economics team director, said: “Our research into the small and mid-sized segment of the I&L market has demonstrated it too is experiencing strong demand but is facing a lack of available supply.

“The types of companies that occupy small and mid-sized units are extremely diverse, as are the occupations they support. Therefore, its future growth can contribute positively to local and regional towns up and down the country, especially given a number of other commercial sectors are facing significant structural challenges.”

Rockett added: “Undersupply is a major problem, especially in the regional hotspots, where companies like Potter Space are willing and ready to invest and support the growth of the local economy. Without more land allocation for the small to mid-box space, local economies will be held back and in the current climate, that is a great shame.”